This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Sri Lanka Bombings Shatter a Recent Return to Stability

COLOMBO, SRI LANKA – APRIL 21: Sri Lankan security forces secure the area around St. Anthony’s Shrine after an explosion hit St Anthony’s Church in Kochchikade on April 21, 2019 in Colombo, Sri Lanka. (Photo by Stringer/Getty Images)

Civic unrest, worker
protests and an unprecedented grab for executive power that riled Sri Lanka
last fall had quieted in recent weeks.

On Easter Sunday every semblance
of stability was shattered.

Three hundred and twenty-one people died that day with more than 500 injured in a series of suicide bombings that targeted Christian churches and three up-scale hotels: the Shangri-La, Kingsbury and Cinnamon Grand. The coordinated attacks were unprecedented in scale. Thirty-nine foreigners perished in nine blasts, including four Americans. Britain, France, India, China, Saudi Arabia, Turkey, Australia, Bangladesh, Portugal, the Netherlands, Japan and Portugal said they, too, lost citizens. Today is a national day of mourning with mass burials in Negombo, a predominately Catholic town housing 150,000 along the western coast of Sri Lanka. A suicide bomber killed more than 150 there in Sunday’s attack. Negombo is known as a fishing village, not for its tea.

Advertisement

NEGOMBO, SRI LANKA – APRIL 21: Sri Lankan officials inspect St. Sebastian’s Church in Negombo, north of Colombo, after multiple explosions targeting churches and hotels across Sri Lanka on April 21, 2019, in Negombo, Sri Lanka. (Photo by Stringer/Getty Images)

Reports are unconfirmed, but
it is feared the toll may include some in the tea industry. Social media
remained blocked on Tuesday after officials said they needed to curtail the
spread of false information and ease tension, according to the National
Post. A curfew remains in place. Security forces patrolling the
streets of Colombo on Monday discovered three more bombs that were detonated
without incident.

Beginning Sunday World
Tea News sent queries to more than 40 tea executives, brokers, factory
managers and government officials to gain a more complete understanding of the
situation. Only two responded and neither wished to be quoted.

Tea is the main source of
foreign exchange earnings on this island of 21 million, a pearl in the Indian
Ocean that is the second largest exporter of tea in the world. The tea industry
employs more than 1 million workers with approximately 900,000 people, or about
4.5 percent of the population living on plantations and estates, primarily tea.
It is an industry troubled in recent months by declining exports; the
controversial lifting of a ban on the herbicide glyphosate and deep-rooted concerns
about wages.

Current
situation

Hasitha de Alwis, director of promotions at the Sri Lanka Tea Board,
reporting before the Sunday incident, noted that “volatile market conditions in
the Gulf/Middle East/North Africa and the payment delays (export proceeds) are
contributory factors to the lesser demand at the Colombo Tea auctions, pushing
prices down.”

The January to March 2019 national average at the Colombo Tea Auction is
$3.35 (LKRs585.30) per kilogram compared to $3.61 (LKRs 629.77) per kilogram
during the same period of 2018 reflecting a value decline of LKRs44.47 per kilogram. “The
drop in real value terms (USD) therefore, will be far greater,” he noted.

De Alwis said tea exports for January/February 2019 totaled 47.2 million
kilograms “showing growth of 4.5 million kilograms (10 percent) against 42.7
million kilograms registered for January/February 2018.”

Iraq, Turkey, Syria and Iran thrive on cross-border trading, he
explained, “The internal country situations and closing/opening of porous
borders contribute significantly to the Ceylon Tea export performance as these
nations are all within the first ten largest buyers.”

Sri Lanka earned LKRs39.9 billion during January/February 2019 as
against LKRs35.5 billion during the corresponding months of 2018 which reflects
an income growth of LKRs. 4.4 billion. Accordingly, the Free On Board
(FOB) value in 2019 has improved marginally to LKRs.845.94 per kilogram in
comparison to LKRs830.40 per kilogram in 2018, said de Alwis.

“In real value terms, the earnings declined from $230 million in
January/February 2018 to $222 million during the same period of
2019. Thus, the FOB Dollar value is 16 percent lower in 2019 at $4.70 per
kilo vis-à-vis $5.44 per kilogram in 2018,” writes de Alwis.

To increase exports five countries have been identified to commence the
advertising and publicity programs during the current year, he said. The Ceylon
Tea Global Campaign is scheduled to take-off the ground from the Russian
Federation in September. Thereafter, in Ukraine and Germany in October
followed by Japan and China during November, according to de Alwis.

Fluctuating
production

Production declined from an average 330-340 million kilograms
during the five years ending in 2015 to a 2018 low of 303 million kilograms after
Sri Lanka first banned glyphosate. The weedicide, used in Monsanto’s Roundup, was
banned in October 2015 over concerns that the chemical causes kidney disease. Sri
Lanka growers then turned to hexaconazole, diuron and MCPA (2-methyl-4-chlorophenoxyacetic
acid) to kill weeds. Application of the alternate
chemicals was not tightly controlled leading Japan, which imported 7.8 million
kilogramss of Sri Lankan tea in 2017, to reject
consignments due to unacceptably high levels of residue. An import
ban on MCPA followed. After studies failed to link the chemical to chronic
kidney disease of undetermined causes, the import ban on glyphosate was lifted
in July 2018 but its use is restricted to tea and rubber plantations.

Glyphosate remains controversial. In March a San Francisco
jury found that Monsanto had been negligent in warning of cancer risks associated
with Roundup and awarded a cancer victim $75 million in punitive damages plus
$5.8 million compensation. The European Union considers glyphosate safe although
France pledged to ban most uses by 2021.

To increase tea production Sri Lanka will plant 13 million tea
bushes on 1,000 hectares in 2019. Two million of these new plants are in the
ground with four million more seedlings to be planted by October.

Agitation for a wage
increase to a minimum of LKRs1000 ($5.72 USD) per day led to street protests
and extended negotiations; the wage was previously set below $4. Wages are
re-negotiated every two years with the last increase of LKRs50 in 2016. The
“Thousand Movement” to increase daily wages gained momentum after a seven-day
tea strike by tea workers in December. In January an interim wage hike to
LKRs700 ($4 per day) was authorized. Protestors cited a study by the state-run
University of Peradeniya that found workers need $160 (LKRs27,707) per month on
average to meet their basic needs. The current average is $45 per month (SLRs8000).

“It is true that tea workers in the up country of
Sri Lanka went on strike demanding higher wages,” writes De Alwis. “This led to
a drop in the production of the high-grown elevation which is only 23
percent of the total production. It may have a marginal impact on
the total production for the year,” he wrote.

“The situation is brought under control and
hopefully, the plucking in the plantation companies will be back to normalcy
during the new year. The bright side of the equation is in Sri Lanka, the
industry has injected democracy to all the stakeholder segments. If the
workers are not happy, they have the liberty of protesting—which they did. We
have multiple trade unions in the plantation sector to safeguard the rights of
the workers. There is no chance to manipulate the labor force in the tea
plantations,” he writes.

De Alwis predicted the “political front is expected
to come back to normal very fast with the re-appointment of the cabinet of
ministers. Hon. Navin Dissanayake re-assumed duties immediately at
the Ministry of Plantation Industries.”

Political uncertainties

Prime
Minister Ranil Wickremesinghe said he feared the Sunday massacre could trigger
instability in Sri Lanka, and he vowed to “vest all necessary powers with the
defense forces” to take action against those responsible. The prime minister on
Tuesday said there are “still people on the run with explosives.” The
government has arrested 40 suspects, all native Sri Lankans and believed to be
members of the 150-member Islamic National Tawheed Jamath (NTJ) a group
previously scorned for defacing Buddhists monuments.

The
Sinhalese majority is largely Buddhist, comprising 70 percent of the population.
The Tamils, native to India, are Hindu, Muslim and Christian. Muslims had been
previously targeted in violent clashes, but Christians had not.